Glossary terms starting with L

Labor Cost Percentage

The labor cost percentage expresses total labor costs as a percentage of revenue.

Labor Efficiency Ratio

The labor efficiency ratio shows how much revenue a firm earns for each dollar spent on labor.

Labor Utilization Report

A labor utilization report tracks billable versus total hours for each consultant and team, showing utilization rates and trends over time.

Late Fee

A late fee is a charge assessed when payment is not received by the due date, designed to encourage timely payment and compensate for collection costs.

Late Filing Penalty

A late filing penalty is an IRS charge for submitting your tax return after the deadline without a valid extension.

Late Payment Fee

A late payment fee is a charge assessed when clients pay invoices after the due date, intended to encourage timely payment and compensate for collection delays.

Lease Obligations

Lease obligations are commitments to make future payments under lease agreements.

Letter of Engagement

A letter of engagement is a formal document that confirms the terms of a professional services relationship, commonly used by accounting firms, law firms, and consultancies.

Level of Effort (LOE)

Level of effort refers to the estimated hours or resources required to complete a consulting engagement and is used for pricing, staffing, and project planning.

Leverage Ratio Analysis

Leverage ratio analysis examines the extent to which a business uses debt financing, typically measuring total debt relative to equity, total assets, or operating income.

Line of Credit

A line of credit is a flexible borrowing arrangement that lets a business draw funds up to an approved limit, repay them, and borrow again.

Liquidity Ratio Analysis

Liquidity ratio analysis tests whether a firm can pay its short-term obligations, using ratios such as the current ratio, quick ratio, and cash ratio.

LLC (Limited Liability Company)

A limited liability company (LLC) is a business structure created under state law.

Lockbox Service

A lockbox service is a bank-provided payment processing service in which client payments are sent to a special postal address, processed by the bank, and deposited directly into the firm's account, often the same day.

Lockup Days

Lockup days measure the total time from performing work to collecting cash.

Loss Limitation

Loss limitations are tax rules that restrict how much loss you can deduct from pass-through entities.